Joho the Blogeconomy Archives - Joho the Blog

September 7, 2012

Mitt Romney’s distrust of entrepreneurship

Mitt Romney is taking some flack for using some notoriously flaky science as his example of good science. But in the same passage he betrays a Big Corporate view of how innovation works that should cost him the support of every entrepeneurial startup in the country.

Here’s the passage from his Washington Examiner interview (with a hat tip to BoingBoing):

CARNEY: What role should government have in promoting certain industr

And keep in mind that Romney here is not talking about the auto industry specifically; rather, he is explaining why governments ought not to back entrepreneurial companies. It’s not just that governments are bad at picking winners, it’s that when the winners are startups — even when they’re way out of the prototypical garage — they’re unlikely to get past “delight.” So, wies or economic activities such as homeownership, or manufacturing, renewable energy or fossil fuel energy, eBig Corp xports, or just advanced technology? What sort of subsidies and incentives do you favor? You had some of these in Massachusetts, I know.

ROMNEY: Very limited — my answer Big Corp to your first question. I’m not an advocate of industrial policy being formed by a government. I do believe in the power of free markets, and when the government removes the extraordinary burdens that it puts on markets, why I think markets are more effective at guiding a prosperous economy than is the government.

So for instance, I would not be investing massive dollars in electric car companies in California. I think Tesla and Fisker are delightful-looking ve

And keep in mind that Romney here is nBig Corp ot talking about the auto industry specifically; rather, he is explaining why governments ought not to back entrepreneurial companies. It’s not just that governments are bad at picking winners, it’s that when the winners are startups — even when they’re way out of the prototypical garage — they’re unlikely to get past “delight.” So, whicles, but I somehow imagine that Toyota, Nissan, and even General Motors will produce a more cost-effective electric car than either Tesla or Fisker. I think it is bad policy for us to be investing hundreds of millions of dollars in specific companies and specific technologies, and developing those technologies.

I do believe in basic science. I believe in participating in space. I believe in analysis of new sources of energy. I believe in laboratories, looking at ways to conduct electricity with — with cold fusion, if we can come up with it. It was the University of Utah that solved that. We somehow can’t figure out how to duplicate it.

So, first the problem with his science remark. I understand that he’s boosting Utah. But the 1989 experiment by Stanley Pons and Martin Fleischmann was famous not only because it could not be replicated, but because it was prematurely hyped by Pons and Fleischmann before it had gone through peer review or had been replicated. (As BoingBoing points out, the Wikipedia article is worth reading.) No matter what you think of the experiment, it is a terrible example to use as proof that one appreciates basic science…unless you’re citing the rejection of the Pons-Fleischmann results, which Romney explicitly was not. The issue is not merely that Romney continues to believe in a discredited claim. The real issue is that this suggests that Romney doesn’t understand that science is a methodology, not merely the results of that methodology. That’s scary both for a CEO and for a possible president.

I’m at least as bothered, however, by Romney’s casual dismissal of entrepreneurial startups as a source of innovation: “I think Tesla and Fisker are delightful-looking vehicles, but I somehow imagine that Toyota, Nissan, and even General Motors will produce a more cost-effective electric car than either Tesla or Fisker.” “Delightful” is a dismisive word in this context, as evidenced by the inevitability of the “but” that follows it. Romney, it seems, doesn’t believe that startups can get beyond delight all the way to the manly heavy lifting that makes innovation real. For that you need the established, massive corporations.

Wow. Could there be a more 20th century vision of how a 21st century entrepreneurial economy should work?


June 24, 2009

Refrigerator Jones

WASHINGTON (Reuters) – An unexpected jump in U.S. durable goods orders last month backed hopes that the economy was healing, but news from the hard-hit housing market remained mixed.

In case you were wondering how long Americans could put off buying that new fridge, we now have the answer: About ten months. (And apparently the time spent resisting the urge to buy that new iPhone: 0.)

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February 25, 2009

Stimulating edumacation

Here’s a useful breakdown of how the stimulus bill will affect education[Tags: ]

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December 8, 2008

Honeymoon inflation

I haven’t researched this — I’m in Paris for LeWeb and am too beat to actually look stuff up — but it seems to me that I haven’t read any of the “First 100 Days” speculation that usually fills the newspapers during the transition. I assume and hope that’s because the media — and we the people? — understand the magnitude of the problems. Why, 100 days is like a billion dollars these days … a drop in the bucket. [Tags: ]


November 28, 2008

Black Friday

Last night, my family and my brother’s family went to the outlet stores in Clinton CT at midnight when they opened. Or, let me be precise: At midnight we were waiting in the line of traffic sprawling out from the parking lot. We got one of the last spaces, and it is a bi-ig freaking parking lot.

The quarter mile of outlets store were jammed. People were lined up outside of popular stores, such as J. Crew, waiting to get in so that they could buy preppy t-shirts announcing their support of J. Crew and all that he (?) stands for, and then wait 20-30 minutes to pay for it.

I don’t know what this says about the economy. Maybe it means we’re not feeling as poor as we should. Maybe it means that we’re feeling so poor that we’ll line up to get a bargain. Maybe it means nothing.

But it sure was a pain in the ass. um, I mean, it was a shopatravaganza!

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November 18, 2008

[berkman] Michael Heller

Michael Heller, from Columbia University, is giving a Berkman lunch-time talk on his book, Gridlock Economy. He says the nutshell version is that when too many people own pieces of one thing, no one can use it. Too much ownership creates gridlock, he says. [Note: I’m live-blogging, getting things wrong, missing stuff, introducing typos, etc.]

Example of gridlock: Too many owners of fragments of mortgages leads to a meltdown because there are too many people for renegotiation of the loans.

Another example: Too many patents to deal with to make advances in bio-tech. There are about 40,000 DNA patents now. Patents have gone up, but fewer “pills in bottles” to cure people. The patents are upstream from the work done to actually save people’s lives.

Another example: “What is the most underused natural resource in America?” A: Spectrum. 90% in this country is dead air. We haven’t updated our allocation system since the 1920s. Geographic licenses with restricted uses and no transfers. That makes it extremely difficult to assemble national wireless networks. We are now almost out of the top twenty for broadband.

Another example: Why do we waste so much time in airports? Why not build more runways and airports? Air travel was deregulated in 1978, and since then only one new airport has been built. If we have 25 new runways, it would end gridlock. But every community is able to block the assemblage of land you need.

We could move from 1% to 20% of energy from wind power, but we can’t set up the transmission from one place to another because of gridlock issues.

Rap no longer raps over samples. Gridlock caused by the recording industry “trying to monetize every shard.”

All of these problems are the same problem. There used to be a fairly tight link between the patent and the product, the land and the subdivision, etc. “That’s the old style economy.” The new style is a funnel. The new style economy is about assembling resources. “The breakthroughs come from assembling multiple pieces of protected property.” The same is true in arts, history, documentaries. “The cutting edge is mashups, is remixes.” “Even with land, the most socially valuable projects require the separate assembly of pieces of property.” But ownership has not caught up with this.

One of the great opportunities is figuring out new tools for assembling resoures, and for updating the structure of ownership to conform to the new structure of innovation.

Tragedy of the commons is that when there’s no clear ownership, shared property may get overused. This was a powerful concept when it was introduced in the 1960s. I was a turning point for the environmental movement because they could see that a bunch of resources issues were really structurally the same. It was also the spur in the push towards privatization: Private property was seen as the solution to the tragedy of the commons: If you own the lake, you have an incentive not to take the last fish out of it. But, privatization can overshoot. But, you can get the tragedy of the anti-commons: Too many owners and not enough use. These tragedies are often invisible: you don’t see the waste of what you’re not using.

Michael’s aim is to make the tragedy of the anti-commons visible by roping together many instances to show they’re structurally the same.

We need to reform spectrum allocation, he says. Patent hasn’t been structurally reformed since 1952.

Q: Pharma and biotech disagree on patent policy. Pharma is more like to change its view. Why?
A: Pharma wants to protect its current pipeline, so it tends to favor strong patents. They are willing to sacrifice more speculative research. Biotech companies like to show VCs that they have patents. They worry about weakening patents.
A: [Jim, who’s written a book on this] Molecules are clearly identifiable. But it’s much harder with software and prcoesses.

Q: [jim] The biotech’s having problems, not mainly because of patents. The joke is that a biotech’s main products are patents. That aside, where’s the evident than the anti-commons is a real problem?
A: So far the best evidence is from Walsh, Cohen. They interviewed scientists who said the anti-commons is not a problem. They’re not blocked by patent law. So, this goes against my thesis. But, those studies wouldn’t get at my concerns. Scientists uniformly say that they simply pirate dozens of patents. That works until they get sued. And the Walsh study doesn’t consider commercial R&D. In pharma, they’d rather extend their current drugs. I don’t think I’ve proven that gridlock is the crucial issue, but it seems to be an issue. By not changing the patent law you’re implicitly making policy as well.

Q: Does what you describe impact innovation driven by money or across the board?
A: Across the board. The open source model gets past this. But even assembling multiple open source licenses can lead to gridlock.

Q: We had an open source CEO summit at Harvard last Friday. There was consensus that this more open approach to sw development would help them economically. Between the commons and the anti-commons, is there a commons that isn’t tragic?
A: Sure. My aim is to encourage people to come up with ways of overcoming the problems, once the problems are visible.

[yochai benkler] This is fabulous. Can you say more about what you think the solution is?For anti-commons to be the problem, you have to assume the problem isn’t with property itself. Is the solution a better idea of property? A better understanding of rights? Transaction costs? Is this about the rapid change of uses so you’re always be behind? How do we move ahead? E.g., what do we do about spectrum? How do you tell what to do? Can you think about this independent of the particular resource?
A: So, Yochai in a polite way is saying, “So what? What do we do about it?” E.g., we all agree that the current telecom model is terrible. Everyone loses. Should the solution be full privitization or a commons? If we have a technological way to get past the scarcity of spectrum, then creating private property is the wrong solution. The freedom-enhancing way is to have a commons, if we can get past scarcity. I am agnostic about this because I don’t know if we have solved the problem of scarcity. But I hope my book moves the debate forward by providing another way of showing what’s wrong.
Q: [yochai] I think the solutions lie in the particulars of the domain. The range for me is models of appropriate based on relations (software services) relative to appropriate based on units that are relatively stable. For me, the anticommons problem is a subset of the spectrum problem, in which rapid innovation renders obsolete. The real problem is that spectrum isn’t a resource. Information doesn’t fall on the floor and get lost.

Q: The public is acquainted with gridlock but frame it through government ownership or intervention, with gridlock arising from regulation. How does your framework frame intervention?

Q: In pharma, ownership incentivizes development. Can you break gridlock into communication and action? You can tell people that the 12 owners of a patent that they’re blocking development. Action would be getting them to do something about it. How do you decide whose valuation is more important?

Q: To what degree is the gridlocked society a description of a set of problems or whether it’s a metaphor. If the latter, where does it get too broad? My mortgage doesn’t really resemble my ideas. What’s the larger mechanism here?

A: On politics: There are lots of areas we deliberately design in gridlock, e.g., criminal justice system or preventing parks from being developed. There’s also regulatory gridlock that stops anything from being built.
On limiting scarcity: When is the right measure the subjective one that lets someone refuse to give up property, and when should you just have to pay the market price? It’s an old question and I don’t have a general answer.
Is it a metaphor? I think there’s more commonality in these diverse areas of the economy. So it’s partially an organizing metaphor, but it’s also meant to describe a new way the economy works. [Tags: ]


November 9, 2008

Reich on government spending

I don’t know enough about economics to fill a Powerpoint slide, but Robert Reich’s argument for government spending makes sense to me. Unfortunately, that translates to: “It seems coherent, even if it is factually wrong, and, besides, I like Robert Reich.”

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September 26, 2008

Country first? Hahaha.

So, as far as I can tell, the story so far is:

McCain sees an opportunity to look presidential and experienced. He announces he’s suspending his campaign so he can rush to DC, although he in fact takes 22 hours to get there and manages to squeeze in some interviews, a speech at Pres. Clinton’s event, and a nice dinner. Plus, his surrogates stay out on the trail bashing Obama, and McCain continues his ad campaign. Other than that, the campaign is completely suspended.

Then, to show that he is not a marginalized Senator on the fringes of economic discussion, he encourages conservative Republicans to back out of the deal the two parties had brokered in a genuine spirit of bi-partisanship so that McCain can spearhead some alternate proposal. Why? Well, since McCain’s original comments — in which he tacitly accepted Obama’s statement of principles — seemed to go along with the deal the two sides had worked out, I can only conclude that McCain would have disrupted any agreement so that he can be perceived as coming up with the new one.

The Democrats are pretty much boxed in. If they make any concessions at all to McCain’s new proposal, McCain will trumpet that he’s the one who saved the economy by wringing changes from the Dems (while ignoring that the original deal before McCain stepped in to “save” us had been bi-partisan).

So, clever move by McCain. Too bad it’s a clever move motivated by McCain’s ambitions rather than by what’s best for the country. For example, today’s economic slide is directly due to McCain’s self-centered disruption of the process.

Nice, John. See you at the debate.

Or not.

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September 24, 2008

Two press conferences

Lynn Sweet of the Chicago Sun-Times has blogged transcripts of press conferences given by the two candidates yesterday:

Barack Obama

John McCain

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September 17, 2008

McCain oversighted the economy

Yesterday, Sen. McCain was on the TV and said to Harry Smith

The point is, I was chairman of the commerce committee. Every part of America’s economy, I oversighted. I have a long record, certainly far more extensive of being involved in our economy than Senator Obama does.

Wow. This seems both to be an in-context quote and remarkably dunderheaded. McCain just shot the entire “experience” argument in the face.

Yesterday was a long day of gaffes and inadvertent truths for the McCain campaign. May the unraveling begin! [Tags: ]

Here’s a 4 minute NPR piece on Obama on the economy. The piece is not very substantial, however. More horse racey.